Managing Salesforce Compensation during the Growth Stage : A Financial Modelling Approach

The salesforce is a strategic lever of the sales organization for improving sales growth, market share and profitability. Various attributes of salesforce such as its size and structure are key components of salesforce compensation design. This research focuses on this direction and provides methodology to identify optimal size of salesforce and the right balance between generalized and specialized sales roles in the salesforce structure. The size and structure of the salesforce significantly impact the operation of salesforce in terms of efficiency and effectiveness and hence it needs to change as the sales organization enters the growth stage. It is mainly because these attributes have highest impact on overall success of sales organization in the growth stage compared to other stages of business life cycle. However, designing an optimal salesforce size and structure is an intricate task. This study looks into this area and develops various matrices and analytical tools to determine optimal salesforce size and structure during growth stage. At optimal salesforce size and corresponding structure, sales organization is able to attract, retain and motivate the ‘right' type of sales people, build long term relationship with customers, gain market share, enhance profitability and thus maximize the value of sales organization. Research develops a financial model and provides a numerical illustration to calculate optimal salesforce size and structure